Bitcoin Forum

Economy => Economics => Topic started by: Atlas on September 29, 2012, 06:05:59 AM



Title: Bitcoin is not real money.
Post by: Atlas on September 29, 2012, 06:05:59 AM
I log into Wikipedia and find that somebody deleted most of the article. What do I find as a reason?

Reason: Most of this is not true. Bitcoin is not real money. It's toy money, etc.

What gives people the idea that Bitcoin is play money when it trades at over $10 a unit? Why can't people see it as real or are threatened by the idea of it being real?

What do you tell someone who says "Bitcoin is not real money."?


Title: Re: Bitcoin is not real money.
Post by: DeathAndTaxes on September 29, 2012, 06:12:19 AM
I would ask

a) what makes something real money?  When they give you a tortured definition I would name things which fail to fit that definition.  foreign currency, gold, silver, silver reserve notes, digital "dollars" (like value in a bank account).

b) does it matter?  For the sake of the argument pretend Bitcoin IS PLAY money.  If I can exchange this "play money" for both USD (or other "real" money) and goods/services is there any value in the definition of real vs play.

If they still don't get it ... well they don't want to get it.   They will get it in 15-20 years when their favorite celebrity is talking about how Bitcoin is the "IN" thing.


Title: Re: Bitcoin is not real money.
Post by: thebaron on September 29, 2012, 06:13:59 AM
The only real criticism is that it cannot currently be exchanged as easily for other currencies around the world.

If someone uses the "because it's electronic" argument, they are stupid. Nobody thinks twice about a debit card as being real money.


Title: Re: Bitcoin is not real money.
Post by: casascius on September 29, 2012, 06:16:40 AM
What do you tell someone who says "Bitcoin is not real money."?

You mean somebody on the internet with a random IP who wandered onto Wikipedia where anyone can edit so anyone did?

You tell them they're WRONG. http://xkcd.com/386/


Title: Re: Bitcoin is not real money.
Post by: odolvlobo on September 29, 2012, 06:22:08 AM
Articles on Wikipedia are defaced all the time, and it does not seem unusual that the article on Bitcoin would be a target. It doesn't mean anything. Just restore it and forget about it.


Title: Re: Bitcoin is not real money.
Post by: adamstgBit on September 29, 2012, 06:24:57 AM
http://imgs.xkcd.com/comics/duty_calls.png
lmao  :D


Title: Re: Bitcoin is not real money.
Post by: drakahn on September 29, 2012, 06:47:23 AM
I log into Wikipedia and find that somebody deleted most of the article. What do I find as a reason?

Reason: Most of this is not true. Bitcoin is not real money. It's toy money, etc.

What gives people the idea that Bitcoin is play money when it trades at over $10 a unit? Why can't people see it as real or are threatened by the idea of it being real?

What do you tell someone who says "Bitcoin is not real money."?

Don't worry, It's not a real encyclopaedia :p


Title: Re: Bitcoin is not real money.
Post by: thebaron on September 29, 2012, 07:00:03 AM
Don't worry, It's not a real encyclopaedia :p

Do they really exist anymore? Encyclopedia Britannica published their last print edition ever in 2010. How long will they be able to keep full time staff on board and still be profitable?


Title: Re: Bitcoin is not real money.
Post by: inglian on September 29, 2012, 01:59:14 PM
Is email real mail? I don't think I care.


Title: Re: Bitcoin is not real money.
Post by: tvbcof on September 30, 2012, 01:22:05 AM
I log into Wikipedia and find that somebody deleted most of the article. What do I find as a reason?

Reason: Most of this is not true. Bitcoin is not real money. It's toy money, etc.

What gives people the idea that Bitcoin is play money when it trades at over $10 a unit? Why can't people see it as real or are threatened by the idea of it being real?

What do you tell someone who says "Bitcoin is not real money."?

As far as I'm concerned Bitcoin is the thing which is 'threatened' by being tagged with the term 'money', 'currency', or 'coin' (though the name is unfortunate in this regard.)  I favor defining Bitcoin as loosely as possible.  My preference would be to define it simply as a 'decentralized accounting solution', focus on making it useful and robust, and let things fall into place from there.

Beyond that, I think it appropriate to let 'the leaders' define things as they choose.  If Bernanke says gold is not money, that is (and was) totally cool with me.  I couldn't give two shits less.  It changed the characteristics of my PM stash and my desire to sit on it not one iota.  If we don't like the way the leadership does things then the appropriate response is to work toward changing the leadership IMHO.  US Govt personal, Wikipedia, etc...



Title: Re: Bitcoin is not real money.
Post by: obisunk on September 30, 2012, 05:45:56 AM
It's the 51% vote at work, or at least the perception of it.


Title: Re: Bitcoin is not real money.
Post by: allthingsluxury on September 30, 2012, 05:00:32 PM
Haha, funny person who clearly doesn't understand the meaning of money. People accept bitcoins for services and goods. Therefore it is a form of currency. If NO ONE was willing to accept bitcoins, then I might agree with him. These are the same type of guys that try to say gold and silver arn't money. When you ask them to explain themselves, their eyes glaze over as they try to remember the most recent sound bite from msnbc that they can repeat like a parrot.


Title: Re: Bitcoin is not real money.
Post by: FrogBBQ on September 30, 2012, 08:01:11 PM
In effect, bitcoin is not money but a currency.

The main difference that distinguishes the two is that money has intrinsic value (like precious metals) while currency has not (it is only worth the price of paper it is printed on). For example, prior to August 1971, the USD was money since you could exchange it for gold. Since then, it is a pure FIAT currency that can (and is) printed ex nihilo by the Fed. Same thing with most currency these days. We are in the end of a cycle (Brenton Woods 2) as most of you know.

What distinguished bitcoin from other currency is the fact that it is intrinsically limited to 21 million coins which makes it very valuable in its own right.

This video may interest some: http://www.youtube.com/watch?v=wfzHC7Pf2fk&feature=g-u-u (http://www.youtube.com/watch?v=wfzHC7Pf2fk&feature=g-u-u)


Title: Re: Bitcoin is not real money.
Post by: odolvlobo on October 01, 2012, 12:50:44 AM

In effect, bitcoin is not money but a currency.

The main difference that distinguishes the two is that money has intrinsic value (like precious metals) while currency has not (it is only worth the price of paper it is printed on).
...
This video may interest some: http://www.youtube.com/watch?v=wfzHC7Pf2fk&feature=g-u-u

Before I launch my assault on your statements, I want to thank you for posting the link to that video. It is a very interesting and Félix Moreno de la Cova does a great job of explaining the issues. Now then, ...

I guess you can define the term "money" any way you want, but that is not how everyone else defines it, but here is a large list of definitions of the word money, and none define it like you do. Anyway, things that have utility may have "intrinsic value", but gold has neither, and I challenge you come up with a non-subjective definition for "intrinsic value".

  • Mirriam-Webster:  something generally accepted as a medium of exchange, a measure of value, or a means of payment
  • Dictionary.com: any circulating medium of exchange, including coins, paper money,  and demand deposits
  • Free Online Dictionary: A medium that can be exchanged for goods and services and is used as a measure of their values on the market, including among its forms a commodity such as gold, an officially issued coin or note, or a deposit in a checking account or other readily liquefiable account
  • Wikipedia: Money is any object or record that is generally accepted as payment for goods and services and repayment of debts in a given socio-economic context or country.
  • Investopedia: A commodity or asset, such as gold, an officially issued currency, coin or paper note, that can be legally exchanged for something equivalent, such as goods or services.
  • Businessdictionary.com: Anything of value that serves as a (1) generally accepted medium of financial exchange, (2) legal tender for repayment of debt, (3) standard of value, (4) unit of accounting measure, and (5) means to save or store purchasing power.
  • Oxford Dictionary: a current medium of exchange in the form of coins and banknotes; coins and banknotes collectively


Title: Re: Bitcoin is not real money.
Post by: ElectricMucus on October 01, 2012, 01:01:18 AM
Most additions on the wikipedia page don't stand up to scrutiny because they do not cite secondary sources and can be interpreted as original research.
You need to understand wikipedia and how it works... Especially editing mainly one article will get your edit removed quite often if this is the case.

To make sure it stays there you just have to be rigorous with your expressions and citations.


Title: Re: Bitcoin is not real money.
Post by: FrogBBQ on October 01, 2012, 01:34:38 PM
I guess you can define the term "money" any way you want

No you don't, currency is not a store of value. Your $1 or $100 bills are the very same piece of paper just with a different number printed on it (in effect a bond of zero duration since it is debt). People accept this number written on it as face value but there is no real value in it, it is perceived as one. However, there is a significant difference between 1oz gold coin and 100oz gold bar!

In economic terms what distinguish currency vs money are:
Currency: medium of exchange, unit of account, portable, divisible, durable, fungible (each unit is interchangeable)
Money:  medium of exchange, unit of account, portable, divisible, durable, fungible + store of value

Your "assault" makes no sense really. You may want to check this web page for additional information [http://fortuneability.com/money-vs-currency-the-story-of-gold-and-silver-by-mike-maloney/ (http://fortuneability.com/money-vs-currency-the-story-of-gold-and-silver-by-mike-maloney/)].


Title: Re: Bitcoin is not real money.
Post by: JoelKatz on October 01, 2012, 01:47:44 PM
No you don't, currency is not a store of value. Your $1 or $100 bills are the very same piece of paper just with a different number printed on it (in effect a bond of zero duration since it is debt). People accept this number written on it as face value but there is no real value in it, it is perceived as one. However, there is a significant difference between 1oz gold coin and 100oz gold bar!
If gold were to displace the dollar as the primary unit of exchange, almost all of its value would come from supply and demand for trade, just as it does for dollars. Most gold would be electronic, not physical bars or coins, just as dollars are. And there would be fractional reserve, just as for dollars. At that point, to argue that this "gold" has intrinsic value as a metal would be about as silly as arguing that money has intrinsic value as pieces of paper.

Does a 1 ounce note redeemable on demand for gold have intrinsic value? If so, then you can't argue that dollar bills are not a store of value because gold notes are also the same pieces of paper with different numbers printed on them. If not, then no modern currency or money will have intrinsic value because people will never bother lugging actual metals around -- under all realistic circumstances, they'll use electronics to move IOUs around. A 1 ounce gold check against the 54 ounces in my gold account works just the same as a $100 check against the $5,400 in my dollar account.


Title: Re: Bitcoin is not real money.
Post by: lebing on October 01, 2012, 07:22:30 PM

This.

lol adam


Title: Re: Bitcoin is not real money.
Post by: YokoToriyama on October 01, 2012, 10:15:16 PM
toy money... i did not know you could eat with monopoly money


Title: Re: Bitcoin is not real money.
Post by: tvbcof on October 01, 2012, 11:52:26 PM
No you don't, currency is not a store of value. Your $1 or $100 bills are the very same piece of paper just with a different number printed on it (in effect a bond of zero duration since it is debt). People accept this number written on it as face value but there is no real value in it, it is perceived as one. However, there is a significant difference between 1oz gold coin and 100oz gold bar!
If gold were to displace the dollar as the primary unit of exchange, almost all of its value would come from supply and demand for trade, just as it does for dollars. Most gold would be electronic, not physical bars or coins, just as dollars are. And there would be fractional reserve, just as for dollars. At that point, to argue that this "gold" has intrinsic value as a metal would be about as silly as arguing that money has intrinsic value as pieces of paper.

Does a 1 ounce note redeemable on demand for gold have intrinsic value? If so, then you can't argue that dollar bills are not a store of value because gold notes are also the same pieces of paper with different numbers printed on them. If not, then no modern currency or money will have intrinsic value because people will never bother lugging actual metals around -- under all realistic circumstances, they'll use electronics to move IOUs around. A 1 ounce gold check against the 54 ounces in my gold account works just the same as a $100 check against the $5,400 in my dollar account.


I'm not sure I see the trajectory of Bitcoin being much different.  That is to say, at scale the transaction costs will likely be so high that most people will use 'bank-like' entities, and there is little reason that I can see why they won't tend toward fractional reserve methods.  I don't think many people will care that much as long as the 'banks' which do so are offering them cheaper transactions and/or more bells and whistles.



Title: Re: Bitcoin is not real money.
Post by: QuantumKiwi on October 02, 2012, 04:29:11 AM
Its a currency, so yes it is a real money.

If you can swap a currency, for a something of monetry value - yes its money...


Title: Re: Bitcoin is not real money.
Post by: ralree on October 04, 2012, 12:24:05 AM
I'm going to delete most of this thread because it's not a real thread.  It's a play thread.


Title: Re: Bitcoin is not real money.
Post by: scatha on October 05, 2012, 11:42:54 AM
I log into Wikipedia and find that somebody deleted most of the article. What do I find as a reason?

Reason: Most of this is not true. Bitcoin is not real money. It's toy money, etc.


Look into their 9/11 article- the official version will always win in there and get stated as fact. The one who writes history, keeps control of 95% of human minds.

[...]  My preference would be to define it simply as a 'decentralized accounting solution', focus on making it useful and robust, and let things fall into place from there.

Keeping a "low profile" as long as possible can actually be an advantage- less attacks !


Title: Re: Bitcoin is not real money.
Post by: gochk on October 05, 2012, 09:02:46 PM
This is how I define "currency" - if someone is willing to take whatever I have in hand or other formats for the good / services that someone provides, that's currency. In that terms, BTC is not used anywhere, or at least used safely; my conclusion is BTC is not a currency yet.


Title: Re: Bitcoin is not real money.
Post by: odolvlobo on October 06, 2012, 02:42:54 AM
This is how I define "currency" - if someone is willing to take whatever I have in hand or other formats for the good / services that someone provides, that's currency. In that terms, BTC is not used anywhere, or at least used safely; my conclusion is BTC is not a currency yet.
Well, I've spent BTC on goods and services, so that makes it a currency -- unless your definition also include some sort of threshold.


Title: Re: Bitcoin is not real money.
Post by: bitcon on October 08, 2012, 08:02:50 AM
my $100 bill is worthless in ethiopia.   you just think your $100 is worth something because it can get you something nearby, but its not backed by anything.  If the whole system failed, i'd just be left with a fancy piece of green colored cotton paper that i could wipe my ass with. if you don't think it can happen to your US dollar, then i suggest you watch this documentary:

http://www.endoftheroadfilm.com


trailer:

http://youtu.be/YiLK98BWFqg


Title: Re: Bitcoin is not real money.
Post by: FrogBBQ on October 08, 2012, 01:36:43 PM
As previously stated, in economic terms what distinguish currency vs money are:
Currency: medium of exchange, unit of account, portable, divisible, durable, fungible (each unit is interchangeable)
Money: all of the above and a store of value

FIAT currencies (USD, EUR, YEN...) are therefore currencies as they do not store any value. As said above by bitcoin they are worth the paper they are printed on. This was not true before August 1971 when you could exchange your green paper for gold, but this is another story. Bitcoin fits perfectly the bill as a currency but not as money as it has no intrinsic value (like precious metals).

This James Turk (GoldMoney) interview of Félix Moreno de la Cova is relevant to the topic addressed in this post I would think.
http://www.youtube.com/watch?v=wfzHC7Pf2fk&feature=g-u-u  (http://www.youtube.com/watch?v=wfzHC7Pf2fk&feature=g-u-u)


Title: Re: Bitcoin is not real money.
Post by: mdude77 on October 08, 2012, 01:38:57 PM
I log into Wikipedia and find that somebody deleted most of the article. What do I find as a reason?

Reason: Most of this is not true. Bitcoin is not real money. It's toy money, etc.

What gives people the idea that Bitcoin is play money when it trades at over $10 a unit? Why can't people see it as real or are threatened by the idea of it being real?

What do you tell someone who says "Bitcoin is not real money."?

I would say, what's "real" money?  Is that fiat green stuff called federal reserve notes that most people call dollars "real"?  Most currencies today are "fiat" meaning they have "value" only because some government says it has value.  Otherwise it's worthless paper.  Look at Zimbabwe for an example of fiat currency.

BTC has a finite limit, which means no corrupt government (which most are) can inflate it to the fund their petty wars or payoff their political friends.  

I'd say government currencies are government backed, BTC is crowd sourced backed.

Or something like that.

M


Title: Re: Bitcoin is not real money.
Post by: RodeoX on October 08, 2012, 01:43:33 PM
What wiki entry are we talking about? This one seems ok, but why does it have a silk road section? http://en.wikipedia.org/wiki/Bitcoin


Title: Re: Bitcoin is not real money.
Post by: FrogBBQ on October 08, 2012, 02:03:52 PM
mdude77 makes a very good point indeed. Under the FIAT model, currencies are limitless since they can be printed ex nihilo by any central bank/government. The strength of bitcoin comes from its decentralized nature and more importantly the intrinsic limited amount that can be generated (21 million), similar in this latter point as any precious metal.

Maybe the current economic terms should be updated to the following:
Currency: medium of exchange, unit of account, portable, divisible, durable, fungible (each unit is interchangeable)
eCurrency: all of the above and finite
Money: all of the above and a store of value


Title: Re: Bitcoin is not real money.
Post by: mdude77 on October 08, 2012, 02:15:28 PM
mdude77 makes a very good point indeed. Under the FIAT model, currencies are limitless since they can be printed ex nihilo by any central bank/government. The strength of bitcoin comes from its decentralized nature and more importantly the intrinsic limited amount that can be generated (21 million), similar in this latter point as any precious metal.

Maybe the current economic terms should be updated to the following:
Currency: medium of exchange, unit of account, portable, divisible, durable, fungible (each unit is interchangeable)
eCurrency: all of the above and finite
Money: all of the above and a store of value

And, actually, while there probably is a finite limit of precious metal in the world, it certainly isn't all available right now.  So while it's possible we will some day run out of gold and silver to mine, I think we'll stop generating bitcoins first.  That sort of gives BTC an edge over precious metal.

M


Title: Re: Bitcoin is not real money.
Post by: rastapool on October 08, 2012, 02:39:54 PM
Wut? Bitcoins and metals are only real money.
Andy why you say that "bitcoin trades at over $10 a unit"?  Money is a measure of things, not at other direction.
So more correctly to say (especially in bitcoin community) "dollar trades at less 100 mɃ a unit".


Title: Re: Bitcoin is not real money.
Post by: FrogBBQ on October 08, 2012, 02:58:24 PM
there probably is a finite limit of precious metal in the world

This is a certainty as with any other resources on our little blue planet.

As for bitcoin they will never be all mined since the network is programmed to increase the money supply as a geometric series, 21 million will not be reached. The difficulty of mining bitcoin tends to mimic real world mining where easy to mine resources are obtained first at low cost and as time goes by it gets harder and harder to obtained and requires either technological breakthrough or massive brute force investment.

http://upload.wikimedia.org/wikipedia/commons/5/54/Total_bitcoins_over_time.png


Title: Re: Bitcoin is not real money.
Post by: mdude77 on October 08, 2012, 03:08:40 PM
there probably is a finite limit of precious metal in the world

This is a certainty as with any other resources on our little blue planet.

I won't get into how so many things scientists claim are certain turn out to be wrong.

Quote
As for bitcoin they will never be all mined since the network is programmed to increase the money supply as a geometric series, 21 million will not be reached. The difficulty of mining bitcoin tends to mimic real world mining where easy to mine resources are obtained first at low cost and as time goes by it gets harder and harder to obtained and requires either technological breakthrough or massive brute force investment.

This graph implies miners quit because they are no longer getting paid as much.  If that's true, then bitcoin has a problem.

I think we will mine all the coins.  Remember, difficulty adjusts to compensate for the network hashing power so that so many blocks are mined over a finite period of time.  As long that stays true, the graph will never go asymptotic.  Correct?

M


Title: Re: Bitcoin is not real money.
Post by: FrogBBQ on October 08, 2012, 03:23:13 PM
Wrong and wrong.

Earth is a limited planet, what are you smoking? Every resource is finite. If we know the exact amount of what is left and can actually be used of any given element is another question.

You should check the definition of a geometric series. Reward will be divided by half every 4 years or so, it is asymptotic by nature irrelevant of difficulty.


Title: Re: Bitcoin is not real money.
Post by: mdude77 on October 08, 2012, 03:39:18 PM
Wrong and wrong.

Earth is a limited planet, what are you smoking? Every resource is finite. If we know the exact amount of what is left and can actually be used of any given element is another question.

Wow, no need to get rude.

I'm glad you're so sure of yourself.  You're in good company with the majority of scientists.

Let's take coal.  Supposedly it was made over millions of years.  Did that process suddenly stop?  Therefore coal is still being "formed".

Same for oil.

What about water?  Can we "use up water"?  Sure we can pollute it to no end, but the earth has ways of purifying it. 

Just because you don't think gold is regenerating doesn't mean it isn't.  Can you prove it isn't?  Didn't think so. 

Quote
You should check the definition of a geometric series. Reward will be divided by half every 4 years or so, it is asymptotic by nature irrelevant of difficulty.

Apparently I misunderstood your graph, and you misunderstood me.

Miners are going to continue to mine at the same rate as they are now.  That's the nature of changing difficulty.  Yes, the number of coins per block will decrease as time goes on.  But we will reach the end.  If we don't, bitcoin is dead, because miners stopped mining.

M


Title: Re: Bitcoin is not real money.
Post by: BobbyJo on October 08, 2012, 09:18:35 PM
I just checked and the article seemed pretty accurate!  Perhaps its been reinstated or re written.


Title: Re: Bitcoin is not real money.
Post by: Crypt_Current on October 09, 2012, 05:24:57 AM
Wrong and wrong.

Earth is a limited planet, what are you smoking? Every resource is finite. If we know the exact amount of what is left and can actually be used of any given element is another question.

Wow, no need to get rude.

I'm glad you're so sure of yourself.  You're in good company with the majority of scientists.

Let's take coal.  Supposedly it was made over millions of years.  Did that process suddenly stop?  Therefore coal is still being "formed".

Same for oil.

What about water?  Can we "use up water"?  Sure we can pollute it to no end, but the earth has ways of purifying it. 

Just because you don't think gold is regenerating doesn't mean it isn't.  Can you prove it isn't?  Didn't think so. 

Quote
You should check the definition of a geometric series. Reward will be divided by half every 4 years or so, it is asymptotic by nature irrelevant of difficulty.

Apparently I misunderstood your graph, and you misunderstood me.

Miners are going to continue to mine at the same rate as they are now.  That's the nature of changing difficulty.  Yes, the number of coins per block will decrease as time goes on.  But we will reach the end.  If we don't, bitcoin is dead, because miners stopped mining.

M

To the best of my understanding, there is an asymptote, there will never quite be 21 million, and the incentive for "mining" at that point will be collection of transaction fees, rather than mined coins.  So the activity should really be given a different name at that point.


Title: Re: Bitcoin is not real money.
Post by: mdude77 on October 09, 2012, 10:21:42 AM
To the best of my understanding, there is an asymptote, there will never quite be 21 million, and the incentive for "mining" at that point will be collection of transaction fees, rather than mined coins.  So the activity should really be given a different name at that point.

Isn't that the same as running out?  :)

M


Title: Re: Bitcoin is not real money.
Post by: bitcon on October 16, 2012, 07:19:53 PM
do i misunderstand how the bitcoin client operates?  if BTC gets widely adopted, just the massive amount # of ppl running the client alone will be enough to keep the blockchain safe and running?


Title: Re: Bitcoin is not real money.
Post by: DeathAndTaxes on October 16, 2012, 07:31:14 PM
As for bitcoin they will never be all mined since the network is programmed to increase the money supply as a geometric series, 21 million will not be reached.

While 21 million will not be reached the reward will go to 0.00000000 BTC unless there is a protocol change.  I can't remember the exact amount but it is just short of 21 million.


Title: Re: Bitcoin is not real money.
Post by: odolvlobo on October 16, 2012, 08:13:43 PM
do i misunderstand how the bitcoin client operates?  if BTC gets widely adopted, just the massive amount # of ppl running the client alone will be enough to keep the blockchain safe and running?
The typical wallet clients don't change the block chain, they just read it. Mining is what maintains the blockchain.


Title: Re: Bitcoin is not real money.
Post by: JoelKatz on October 16, 2012, 09:47:55 PM
do i misunderstand how the bitcoin client operates?  if BTC gets widely adopted, just the massive amount # of ppl running the client alone will be enough to keep the blockchain safe and running?
Even if they mine while running the client, it won't be enough to keep the blockchain safe because of the huge computational advantage specialized hardware has over commodity hardware. However, if transaction fees aren't enough to incentivitize mining by then, it won't be worth attacking anyway.